About this Show

Worldwide Exchange

News/Business. Ross Westgate, Kelly Evans. Ross Westgate and Kelly Evans consider the business stories that have global significance. New.

NETWORK

DURATION
02:00:00

RATING

SCANNED IN
San Francisco, CA, USA

SOURCE
Comcast Cable

TUNER
Virtual Ch. 58 (CNBC)

VIDEO CODEC
mpeg2video

AUDIO CODEC
ac3

PIXEL WIDTH
528

PIXEL HEIGHT
480

TOPIC FREQUENCY

China 48, U.s. 30, Algeria 23, Us 19, Glencore 10, S&p 6, Beijing 5, Libya 5, Shanghai 5, Morgan Stanley 4, Eunice 4, Cameron 4, Eu 4, France 4, Chicago 4, Europe 4, India 4, Frankfurt 4, Britain 4, Mali 4,
Borrow a DVD
of this show
  CNBC    Worldwide Exchange    News/Business. Ross Westgate, Kelly Evans. Ross Westgate and  
   Kelly Evans consider the business stories that have global...  

    January 18, 2013
    4:00 - 6:00am EST  

4:00am
4:01am
welcome to "worldwide exchange." i'm kelly evans. these are your headlines from around the world. china's economy rebounds into the fourth quarter, beating expectations and snapping seven straight quarters of slow growth. the british government says there's no indication that the hostage crisis is over in algeria as the reports emerge that doesz may have been killed in a rescue operation. investors are unnerved by big spending plans in 2013. plus, glencore pushes back its mega merger by weeks as the
4:02am
regulatory commission begin necessary south africa. welcome to the program. i want to bring you some breaking news in terms of energy prices. the iea is out with its latest 2013 oil report. it expects u.s. oil demand to remain flat on the year. but the headline here does appear that the market, according to the iea language here, is tighter than we thought. all of a sudden, the market looks tighter than we thought. that's the main message we're getting from the organization. it says the world forecast to consume about 90.8 million barrels per day in 2013, up by about a quarter of a million since december.
4:03am
despite seeing the u.s. slight to even negative, seen as driving increase in demand and global supplies felly 170,000 barrels per day in december to 192 million. opec supplies falling to its lowest level in a year in december. global refinery rose by 1.5 million barrels per day. the oil market looks tighter than we thought and china has a lot to do with that. china's economy finally picked up pace in the fourth quarter. that gdp number came in above forecasts, growing 7.9% from a year earlier. industrial and retail sales grew estimates. to put it in context, china's growth is the weakest in 13 years. now eunice eu joins us from beijing with more of the
4:04am
details. eunice, there have been questions about china's reliability in data. over the past couple of years. >> there's always a big question about that. in fact, goldman sachs and ubs were some of the brokerages that came out recently questioning the latest december numbers for the export figures. they were concerned that the export numbers reported by china didn't seem to match the export data from its trading partners and the slow at some of the ports. that was raising questions. the chinese officials came out and defended the numbers and said that the numbers were all well and good. there is so much skepticism about that. the trade data was looking as though it was very much in flux. however, when you take a look at those in isolation, it raises a lot of question marks. but in terms of going forward,
4:05am
how you read these data points, most economists say you have to look at them as guidelines. this is a developing economy. so in terms of guidelines, the latest figures that we saw for 2012 in terms of gdp or for industrial output and everything else that we saw today looks as though it's point to go a rebound for the chinese economy. although the big question is whether or not this is a full blown recovery and we just don't have those answers yet. kelly. >> eunice, thanks very much recording in from the evening in beijing. you can see the increase in smog we've been seeing all week there. for more on what's happening in china, lewis patz. welcome. thank you so much for your time today. let's start, because as we just heard from eunice, there's a sense that maybe if the decimal point doesn't tell you the whole story, it does add to the feeling growth is turning around. do you expect in 2013 that we see a pick up in china?
4:06am
>> yes. i do think that 2013 as a whole will look better than 2012 did. we started 2012 very weak. we ended 2012 a bit better and we enter 2013 stronger. so it's that momentum that really helps growth in 2013. it still think that we'll see some headwinds coming both from the global economy and also from them in choin na itself. but overall, 2013 looks like it's going to be a pretty good year. >> lewis, what about the composition of that growth? we know in order to quell investors longer term, there needs to be consumption. we know in this report it sees china as a major reason for upping its oil demand in 2013. is this the year that china transfers more to the consumer? >> well, kelly, this project that china has in place of
4:07am
changing pattern of growth, it's very much a long-term project. at any point in time, we have the long-term plans of moving towards more consumption, more services. but when push comes to shove, we still see that it is easier to stimulate the economy by investment than consumption. so at the moment, we're seeing quite a bit of emphasis at the moment. the rebalancing may happen over the longer run, but we may see an awful lot of progress in this year. >> we've seen shanghai shares after raising a lot of concern from last year with their underperformance, people pointing out that shanghai did worth than athens in 2012. is there expectation of more policy on the fiscal side? what's your view on that? >> well, you know, the policy stance depends a lot, of course, on what's happening in the economy. and i would say if growth is
4:08am
coming in at numbers we're seeing now, i don't think we'll see a tremendous amount of further policy easing. there are also some concerns in beijing about inflation, about financial leverage. and so i think that we don't -- we should not expect too many on the policy side. one thing that helps the stock market at the moment is that the profitability picture is not looking as bad any more as it did in 2012. and so that outlook on somewhat better profits in companies is giving some support to the stock market, as well, was in addition to what's happening with the overall economy. >> and just to get into the mood of some of the people there, i referenced the smog. we saw a little bit of it in eunice's shot there. what does this do to the discussion in china about the quality of the effects of this super fast growth. it's interesting that at a time when there seems to be a coming to terms to the fact that china noo needs to slow down to some extent, you're talking about how their economy is set to pick up and maybe then we'll see more
4:09am
negative consequences from that. >> i think indeed this project, to rebalance the economy and what is needed from that is something that at times is at odds with what policymakers want to see at the moment. and so, you know, there are always long-term plans for reducing the role of investment. so in the meantime, we're seeing a lot of emphasis on making sure that enough investment is in place to stimulate growth. and so this question of what will the new leadership do in terms of laying out some of that structural reform, that is something we all are looking for and probably will get more answers in march when the two important meetings happen in china. >> we're looking forward to that event. lewis kajs thank you for joining
4:10am
us. let's see how markets are reacting to this. li sixuan is joining us now with the trade report. >> the shanghai composite gained 1.4% today after more signs of china's recovery in that q4 gdp and december data. commodity is the place to go after financialmakers were all broadly higher. the liquormakers were higher over concerns of anti-trust inspection. mainland shares were higher by over 1%. the hang seng hit a new 19 1/2 month high let by energy gainers. tsmc shares jumped 2.2% to near its all-time high after the world's largest contractmaker forecasted above the q1 sales. in japan, boj had easing.
4:11am
fuel engaging exporters. sony shares had a tall percent today and the nikkei 225 jumped nearly 3% to hit a 32-month high and managed to log its tenth straight weekly gain. elsewhere, a rebound in technology shares in financials sent south korea's kospi higher by .7%. and down under, solid china data helped the aussie market close at a 20-month high. rio at this pointo shares jumped after appointing a new ceo. back to you. >> sixuan, thank you very much for that. interesting to see that increase in rio shares. yesterday, ross pointed out that it was really a corporate story driven market. today, there's a few more macro concerns but for the most part we're seeing major indexes in europe higher. the xetra dax just ticked lower.
4:12am
i want to show the ibex here, adding about 1.06% today. we did learn that bad loans in banks rose in december up from what was expected. that was 11.4% in november versus 11.2% in october. so an increase there in what we know was not a great month for the european economy. the ftse 100 over here up by about 0.2%. take a look at the bond wall of just what kind of trade we're seeing more broadly. interestingly, spain and the uk are seeing their prices down, yields up a bit. italy, though, for the ten-year rallying a little bit to 4.17%. and the german bund is 1.6% this morning. forex is where most of the act and a lot of the market focus has been. we can take a look at a couple of key things this morning. let's start over here with the tlifty watch, as i like to call it. 1.2520. the ceiling was kept at 1.20 and
4:13am
for a time there was discussion about how much safe haven flows would put pressure on the banks. people were exiting that safe haven trade. adding .4% today. this has been a huge story. also a big one as the australian dollar weaker by 0.5% despite that stronger chinese figure. we'll have more discussion on that a little later in the program. the dollar/yen, 89.87. we did see this trade above 90 starting last night continuing through some parts of the morning. is it a short squeeze? perhaps. citi and is others are talking about how the yen is now undervalued after being overvalued for so long. euro/dollar, who cares about that one today? let's talk more about china. we'll head out to hong kong for in-depth analysis. intel giving investors the jitters with a disappointing forecast and a massive increase in capital spending. we'll look at those figures just
4:14am
after 10:20 central european time. 16 minutes later, we'll head out to bangor to talk to the ceo of wipro. and the hostage crisis continues in algeria. we'll have the latest news right after the break. stay with us. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.
4:15am
4:16am
4:17am
welcome back to the program. a spokesman for the british foreign office says the uk government has received no words that the hostage crisis in algeria is over. most of the reports suggests dozens might have been killed during a rescue operation carried out by the algerian military. western governments have said they were not consulted by any action to free the hostages held at a gas plant in the algerian desert. according to a report, 30 hostages and 11 is islamic militants were killed during the raid. but we're still following the developing station wagon. just now, we're learning a u.s. plane has landed near the algerian hostage site in order to evacuate americans. also learning from the iea's report, no surprise here that the hostage raid has put a, quote, dark cloud over algerian energy.
4:18am
those event necessary algeria saw david cameron postpone his speech in the eu. cameron was expected to offer a referendum on the country's renegotiated role in the eu which he is to say was suffering because of the eurozone crisis, a lack of competitiveness and declining public support for the 27-nation block. joining us noud, gideon rockman. great to have you here this morning. we're supposed to be talking about cameron's policy speech, laying out the future course for the eu relationship with the european union. now he's canceled it. is that the right move in your view inspect. >> yeah, i think he had to. he would have done it with deep reluctan reluctanc
4:19am
reluctance. it's in danger of become ago bit of a joke, but -- >> it's almost seemed he was reluctant to give this speech. you know what it means when someone chooses a friday to give a policy speech. >> actually, the reason they came on this friday is because they were going to do it early next week, but then it clashed with president obama's inaugural address. that clashed with the anniversary. it was becoming a bit of a farce. actually, these events are becoming so tragic. it's difficult for cameron. i think his ideal would be to forget that he ever promised to make this speech. obviously, that's not going to happen. thou they're going to have to reschedule it with the contents trailed. it's a bit of a mess. >> and we'll get into more of the situation in algeria in a minute, but i want to look at the uk and the eu. a lot of people in the european union learning about all this is
4:20am
why is it that cameron is deciding to make such an issue of this? >> if you look at the opinion polls, there is. at the moment, something like over 50% of british people say they want to leave. not renegotiate it, but leave. my personal feeling is if it came to a referendum in the current climate, those numbers would change and britain would stay in. but it would be a real mistake to underestimate the disillusionment. cameron can't just ignore that. he has to respond to it a bit. particularly since those things are stronger within his own party. >> what about the criticism that britain wants all of the action to the european union without having to abide by any of the rules? >> it's a very difficult criticism for cameron to deal with. that will be at the heart of any negotiation. he has to try to repatriot somehow if he's set that that is what he's going to try and do. but the european leaders will look at the package deal.
4:21am
you get this market access in return to agreeing to certain things. none of us like all of it. the french don't like some of the liberalizing measures. but it's a negotiation and a compromise deal. that will be very, very hard. but if cameron can't get something, he will end up being almost humiliated. he's in a difficult position. >> and how has this soured relationships between britain and europe complicated any response here? could you add the situation to the sense that militant islamists are trending towards west africa? >> i guess if there is any upside to this, it indicates that in the security field, britain and france work closely together. they're in a way that seem like most like-minded countries maintain a reasonably sized military. so i don't think -- when there's a crisis, the european countries
4:22am
will pull together and try to help each other, particularly when faced with something like this. i think what we're seeing is what started this really a threat of a small situation that, you know, limited intervention by the french and mali has escalated into something much bigger. in neighboring algeria, you have this enormous crisis and you have a sense that as a regional prep we're semi ignoring which has flared up into something major. >> mitt romney, during one of the presidential debates, was almost mocked for bringing up malley so often with everything going on in terms of foreign affairs. several months later, this is now, as you say, the issue and the flash point in which people are reconsidering what is the next decade going to look like? what is the next threat going to look like in terms of -- and i don't know what the right word is here. is it militant islam? >> there will probably be some shorthand for what we're talking
4:23am
about. for the syrians, we have another afghanistan with europe, actually, because the reason that they feel they have to interve intervene, even though they've got their fingers so badly burned from interventions over the years is you can't have these lawless zones of operation. >> to me, what the french are known for, if you go back over the years, they say they were against the war in iraq. why the 180 degree turn around to get themselves involved in a completely open ended conflict taking on a tremendous enemy that no other nation has successfully combatted or defeated? >> well, it's a very decent question. i think the french would draw a distinction. they would say they backed afghanistan and they will back mali for the same reason in that there was already the lawlessness of what they moved into combat here and what they're prepared to do in afghanistan. they're opposed to iraq. lastly saddam hussein was a
4:24am
stable regime and it hadn't in recent years been aggressive. but nonetheless, if you're sitting in london or paris, you're thinking, oh, my god, another intervention at a time when our military is losing strength, not gaining strength. >> exactly. and it's interesting to see the u.s. response being very cautious. we'll hear from the president on monday whether he makes a big policy statement on this, perhaps unlikely. but for the bridge stickersel here and to go back to david cameron, wa kind of pressure is on him to formulate a response here? not only in this event, but for the next round of activity to unfold. >> it's a very fast-moving situation. i think their first response was to try to be supportive to -- not too supportive, send a couple of planes, send our own troops. however, if a lot of troops have been killed in the algerian situation, if the mali thing gets out of hand, there may be pressure to rachet up the
4:25am
response. president obama's response is incredibly important. all of the signals we've been getting from the white house is they are not moving very fast. they didn't want to be involved in libya. clearly, chuck hagel was very opposed to intervention. he's sent a strong signal this is not something america wants to get involved in in the second term. maybe they will be dragged into it. >> and maybe another place where president obama wants to be seen on the domestic front. the latest news we're getting from the algerian situation -- do we want to do that here? first, let's go back to a corporate story. when it rains, it pours in the news room sometimes. boeing being in the news this week is concerned about the safety of its airplanes continue now. japan transport ministry investigators saying the cause of the overheating on the nippon
4:26am
airways flight earlier this week is unknown. interestingly, making some comments about those batteries that they have inspected and there are, we know, u.s. safety officials on the ground in japan today to continue that investigation. now, glencore has postponed the completion date for its $33 million miner with xstrata. the uk-listed commodities trader pushed back the dead like to march 15th. the news comes as south african officials discuss the tie yepup today. regulator ves given the green light for the deal to go ahead. it's only the latest company in the mining industry or latest tie-up, we should say, which has been in the news. elsewhere, intel shares are trading lower on the news. the company expects a jump in capital spending this year. intel projects costs of $20
4:27am
billion in 2013 and expects revenue toes fall short of expectations in the first quarter. you can see shares down better than 4%, a big move for this side company. cnbc's john ford sends us more. >> a bit of whiplash for investors late n session and after hours on intel's earnings. they came out a little bit early. at first, they looked good to some people because the stock popped. after hours, it took a dive. let's take a look at what happens. intel's revenues in line, a little light. the street was looking for $13.5 billion in revenue. in earnings per share, wall street wanted 45 cents. intel turned in 48. looks pretty good, right? part of that was due to a tax benefit. intel specsed a tax rate of 27% and got 23%. that helped a bit. gross margins came in stronger than expected at 58% where intel had guided to a mid point gross margin of 57%. but there was bad news beyond
4:28am
that for the investment community. for q11, intel guided to a mid point in revenue of $12.7 billion, plus or minus a half a billion dollars. and for the full fiscal year, 2013, intel said just expect low single digit revenue increases, growth margin to 60% and cap ex at $13 billion. that is a couple billion higher than wall street had expected. >> jon fortt there. we'll have more on china to come. our next guest weighs in. don't go anywhere.
4:29am
4:30am
4:31am
welcome back to "worldwide exchange." china's economy rebounds in the fourth quarter topping expectationes and snapping seven straight quarters of slowing growth. the british government says there's no indication the hostage crisis is over in algeria. this as reports emerge that dozens may have been killed in the rescue operations. intel shares under pressure as investors are unnerved that the chipmaker's big spending plans this year. is and glencore and xstrata push back the deadline to complete
4:32am
their merger by six weeks as a regulatory meeting begins in south africa. bringing back our discussion yesterday when it comes to uk retail sales, today we're learning that retail sales fell in december, this in contrast with expectations of a .2% gain. they fell by 0.1%. some of the report suggests that the tone is weaker than that headline initially shows. it was the year on year gain and the three-month decline on both the worst since december 2010. so a not great way that retail sales ended the year and that holiday season for the uk. we're seeing sterling now fall to an eight-week low against the dollar. you can see there the drop-off as soon as that daed data came out. now down .4% under for the morning. retail sales were expected to gain .2%.
4:33am
and the year on year decline is the worst since 2010. we're saying with forex for a second because we're seeing the euro take it on the chin. it wasn't a half an hour ago that i said no one cared what was going on this morning. i was wrong. the euro now falling against the swiss franc. the euro is also falling against the dollar, so it's down by about .25%, 1.3339 is the level there. we did get some figures showing the spanish bad loans were worse in november than expected. that may have something to do with it. take a look at the reaction across the rest of markets. we can look at the bonds in particular. gilt futures are rallying to session highs after the weaker than expected retail sales figures. for the most part, yields are lower. expect in spain, so, again, that may be reflecting the turn for the worst that is happening since that spanish bad loan data came out. major bourses, now we can show
4:34am
you, we looked to start in the green for the most part and that's still mostly the case. the ftse up by about .25%. cac 40 looking to hold on to their gains. intel down in that index. let's take a look at commodities. we did get the iea's latest update in which it described the market tighter than expected in december for 2013 and this comes as there's continued inrest and violence in syria as we've been exploring what is happening to oil production in that region approximately still, we're seeing light crude down by .2%. brent crude down by about .25%. that may be reflecting the general risk off attitude today despite better than expected chinese data. so if you can figure this one out, good on you. china's economy did pick up pace in the fourth quarter. industrial output and retail
4:35am
sales beat estimates. to put it in context, that growth in china was the weakest since 1999. what does this mean for commodities command out of china? joining me now, warren gillman. thanks for joining us. thanks for your time. what's happening in the commodities space as of late? let's start with china. does this in your opinion point to a further rally in commodity prices? >> it does, kelly. it's obviously good news. 7.9 is above expectations. more importantly, it's a reinforcement of the trend that we've seen evolve over the last two or three months. clearly, china growth slowed the most in q3 the, q4 starting to come back. and expect 2013 to be reasonably good. so this is certainly wind at the back of commodities to begin
4:36am
2013. and i would expect to see it continue throughout the year. >> we've seen rallies already. people were talking about $100 iron ore at these prices. how much further can we run here? where in particular do you expect to see outperformance? >> not all commodities are going to outperform. copper is still the place that you want to be. ten has been a great performer over the last six months or so and has continued to overperform in the last few weeks. great supply/demand situation. lead is reasonably good. short-term, zinc isn't looking particularly good. longer term, it's going so fair voenlly well. the laggards are always aluminum and probably nickel at this point. i think that the energy complex,
4:37am
as well, is going to strugfrom the supply/demand situation given the game changing gas situation in the u.s. >> and, warren, it's so true. i can't tell you how much outlook briefings i've come across. it's saying the market is tighter than expected. and you look at the unrest across west africa. has that thesis now been bunted? >> not at all. those are short-term effects. i think we have to look at the longer term trend. and from a supply/demand perspective, we're going to continue to see growth in supply. obviously, demand is going to grow intermently and that meevens extra demand coming from china. at the end of the day, the supply is going to outstrip it so it's probably going to be one of the poorer performers. that translates into the entire energy complex. it translates not only from natural gas but to oil.
4:38am
then to energy coal, to thermal coal and ultimately to uranium, as well. i think you're going to see a general underperformance in that sector in the mead why term. you will see short-term risks and what you've got going on in algeria today, obviously a cause for concern. >> and we're just learning that al qaeda-linked kidnappers in algeria are promising to carry out more operations. but just to go back to one of the deals that we heard about this week -- not the deal, sort of a deal fallout. you mentioned the difference in aluminum which has been a story for years now clearly weighing on that acquisition. the ceo is out. going forward, how do you play potentially the commodities space here? do you like a rio? do you like the big companies now? >> frankly, i tend to stay away
4:39am
from the super majors. i tend to stay away from the rios and the bhps, the nevales of the world. i'd rather be positioned in the companies that those giants will be taking over. clearly if you were an investor in the majors over the last few years, you've suffered a tremendous destruction of shareholder value with some of these acquisitions. you were better off at having rio take you over. i look down at the second and third tier where you can get that exposure to the metal. there is always the possibility of corporate action as compared to a rio tinto as an example.
4:40am
tremendous fallout as a result of a write-off of almost $30 billion in total on alcan over the last four or five years. and, obviously, the riversdale acquisition was the nail in the coffin. >> warren gil marn on the acquisition plays, chairman and kre o of cf holdings. thank you very much sfloop during that segment, we mentioned some troubling news. al qaeda-linked kidnappers are warning algerians to stay away tr foreign company installations. this according to ani, citing a spokesman for the group promising to carry out more operations. we know they have said they use these operations as a major source of fund-raising. so the question there becomes for the energy complex more broadly, what do they begin to stay away from some of these major markets on concerns that these problems won't be just one-time issues, but, in fact,
4:41am
longer term ones. and now i just want to get a little bit of detail for you. if you can just give me one second. we can tell you what's happening there. the ceo is confirming the first quarter outlook for that company. and backing the full year 2013 view, he's confident he can seal america we the end of september and can we show the share reaction there on this news as they work through some of their outlook comments for 2013. he says there's no plans to sell europe, but there's plans to sell america by tend of the fiscal year. over to india, ip giant wipro surpass eed pektations fo its quarterly earnings. shares, though, took a hit on the back of muted guidance for next quarter. the weaker than expected growth with the poor services business weighed on shares.
4:42am
take a look at how they're trading now. the last we checked in, down more than 7% in indian trade. joining me now, farish zenapiti. thanks very much for your time. >> you see shares down 7%. investors are worried about your guidance for the next quarter. why is it that you see a moderation in revenue growth? >> the rt quarter three has been up the way we guided. we have got revenue growth in terms of 2.4% and 2.7%. we saw margin expansion. we saw net income growth of about 7% to 8%. and we saw growth far, far higher above for three quarters 136%. more than 110% of our net income is our free cash flow that we've generated, as well. cash flow management, revenue
4:43am
profits, government satisfaction has improved, employee satisfaction has improved. so far as far as the full quarter guidance is concerned, the percentage is down. but prumly because while there is optimism around in the marketplace, you have two segments which are in some form deliberate of an overhang lie the u.s. there is an issue with respect to fiscal deficit. where we saw the debt ceiling. so if that were to get into any kind of a logjam, not getting results, there can be some amount of sentiment that can impact us. and impact the customers and, therefore, to us. similarly in india, you look, the budget is going to come up in february. worry seeing further moderation in interest rates. but we still do not know, because quarter four tends to be
4:44am
a very good quarter. we have concern because we have very good revenue comes from india gee of fee. but some of those moves that will happen by the government and therefore the decision for investment and therefore there is a little bit of uncertainty. that is a big reason why we have given a guidance of .5% to 3% in large range. >> suresh -- >> based on the deal plan that we have, we feel that -- what? >> so just to be clear, you're basically saying just so people know what we're talking about, the guide kwans for the current quarter was between 1.2% and 3.5%. you came in at 2.4% revenue growth. your guidance for the next period is 0.5% to 3%. that was half a percent lower than the market was expecting. but you're saying the reason is not because there's strong demand for your products, but because of the political risks
4:45am
around the u.s. in the debt ceiling and india and the budget? >> you are dot on, absolutely. >> that's interesting. if it wasn't for those two risks -- i think we are clearly in a territory that we are engaged with the customers. we are coming out with more and more solutions in the advanced technology area. we're trying to help customers in terms of saving a lot of money on the business and trying to come out with solutions to be able to change their business by looking at their cost structure, looking at technology, looking at taking out costs and everything because that is the environment when the i.t. budgets are much flatter.
4:46am
so from that point, we were looking quite good so far as we get into the next year. >> and last question, what do you think this company will look like in calm of years time? it's been through so many transformations, changing business over the years. is this going to be a company that is still heavily focused on i.t. services as you divest some of the other parts of the business? what do you think this will actually look like in, say, 2015? >> clearly, you've been clearly focused on i.t. services, we had the demerger announcement last quarter and we are progressing very well. so as we exhibit this for the calendar or near or on that, we should be able to be done in terms of activity. which means if we're limited now, it will contain only the products and services in the geography. services are globally. it will focus more and more in terms of momentum as we identify with the life sciences, energy, natural resources, liquidities all in terms of fm services or
4:47am
retail and goods. and a deal supported by the practices like business obligation services, bpo and also i.t. and cost structure and supported by advanced technologies like cloud, mobility, mobility, these are the services which will enable customers to be able to use their business models. >> and we will leave it there. thank you so much, sir, for your time this morning. now, staying in asia, in japan, exporters helped fuel a market surge in tokyo on the back of weakness. toshiko is here with more on what's keeping the currency down. do we expect this to continue? >> yeah, kelly, it has a lot to do with what the bank of japan does next week. the market is clearly banking on mormon tear stimulus. the yen fell against the dollar, hit ago 2 1/2 year mark.
4:48am
the nikkei is reporting that the boj is preparing mormon tear easing. possible moves include a roughly $200 billion expansion over the boj's asset purchase program. this would be the first time in more than nine years that the central bank would take easing steps in back to back policy meetings. the government and the boj reached a basic deal on an upcoming statement. the statement would call for the boj to adopt a 2% inflation target and will define the government's role in fighting deflation. japan's finance and economy ministers met with the boj governor for the final talks and the boj will formally commence to this next tuesday. after today's meeting, the finance minister called monetary policy although it won't resolve jap japan's flowing economy, he said it needs to be paired with fiscal policy and an economic growth strategy. back to you, kelly. >> fascinating story, i have to
4:49am
say. thank you very much. stick around. ahead on the program, glencore and xstrata are putting their mega merger on hold again. find out more from carolin roth when we come back. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.
4:50am
4:51am
4:52am
welcome back to the program. the uk government has not received word that the hostage crisis in algeria is over. multiple reports suggests dozens might have been killed during a rescue operation carried out by the algerian military. western governments have said they were not consulted by any action to free hostages held at a gas plant in the algeria desert. the latest reports suggest a u.s. plane has landed at the local airport in order to evacuate americans. valentina, thank you so much for joining us this morning. fast-moving events and we're trying to figure out what's happening on the ground there. what's your understanding of the situation on the ground inspect how much of an impact is it going to have for energy markets? >> the situation is changing very quickly, every hour at
4:53am
times. and at the moment, we have very little details as to how and if anything the algerian government is going to try and attempt another rescue operation of the remaining hostages. there are still workers being kept, you know, by the militants on the ground. and so we don't know exactly how that will develop in the thx few hours. of course, we decide that the algerian government hasn't been that keen on sharing information on operations and the operation with the british government is with states. >> valentina, as i understand it, al qaeda did operate back in the '90s out of africa before moving to the mid east in the way that oolt of us still associate their presence. is this group moving back to west africa? can you tell us a little bit
4:54am
about al qaeda and the islamic -- and how people understand the significance of these eventes and just to get a sense of why there might be so much concern from the national community about how to handle the situation in mali. >> it originated from algeria. they were actually the -- the terrorist group, the main terrorist group on the ground during the 1990s and they were actually defeated and removed basically by the algerian government, very harsh response, counterterrorism response by the algerian government and they were successful in that sense. but that only meant that the group actually spread across the region, so was able to basically move very shrewdly across the region, you know, the borders between mali, niger, and algeria itself. so they've always managed to
4:55am
remain somehow active and they've been involved in activity during this year, actually to sustain kind of actually their operations. so they remain somehow in the background, but still from a terrorist point of view in terms of active attacks on -- you know, against algeria and relevant in the sense. and they try now for the ability across the region to possibly strike back against the algerian government. >> valentina soria, we'll come back to you to for these events hopefully. thank you. carolin is joining us now from zurich on the latest on the glencore xstrata merger. >> glencore and southcom said a
4:56am
couple minutes ago that they have reached an agreement. it says eskom has now withdrawn its objections to the glencore/xstrata merger meeting. glencore and eskom have agreed on a framework that would guide future coal agreements. this comes on the heels of this morning's announcement by glencore and xstrata that they have once again moved the deadline for that $77 million merger. they have moved it back by six weeks. this is actually the first time that the completion of the merger has been pushed back. this is all about regulatory approval. the sticking point was the regulatory approval from south africa and from china. now, the south african part of the equation, that seems to have been solved with the agreement between eskom and glencore, but they're still waiting for the chinese approval and talks about that probably won't be kicking off until after the chinese new year. but, again, just to remind you that glencore is used to showing a little bit of patience with
4:57am
regard to chinese approvals, because last year when glencore announced the deal, it took the chinese authorities nine months to actually give its nod of approval. but there is still a lot of hope in the market that the chinese approval will be given before march 15th, the next deadline. but, again, it's a very, very complex deal and this is highlighted by the fact that this deadline has been moved three times. kelly. >> and maybe won't be the last time. well see. carolin roth following the story for us. thank you very much. difficult one there. a couple of stories to check out on our website. china's gdp did grow faster than expected, 7.9% in the fourth quarter. can it be sustained? plenty of analysis at cnbc.com. also, as the debate over easing monetary policy continues, wa conditions will it take for the fed to to the stop printing money and buying more t bills? there's information on the website about that, too. and u.s. stocks have been buoyed by positive housing and jobless claims data.
4:58am
can the s&p 500 hit that 1500 mark? and can it happen to you today? cnbc's executive news editor patti dom says big earnings will hold the key and there's more for her views at cnbc.com. among those heavyweights set to report later is general electric. will the conglomerate's latest discuss the economy? we'll discuss and preview when we come back. and it's snowing in london. i'll have to get any jacket out. we'll be right back.
4:59am
5:00am
5:01am
welcome to "worldwide exchange." these are your headlines around the world. a u.s. plane lands in algeria to evacuate americans from a gas plant under seernlg as reports suggest dozens may have been killed in a res kugz operation. china's economy rebounds in the fourth quarter. intel shares are coming under pressure as investors are unnerved we the chipmaker's expending plans in 2013. and glencore/xstrata delays their merger by six weeks.
5:02am
one of the companies opposed to the deal dropped its initial complaint. so will today be the day that the s&p 500 breaks 1400? we've been at five-year highs for this index. it comes as jobless claims for the index fell to five-year lows. although the one-week decline was so large, it would probably have been an appear ragz. the nasdaq and the dow jones industrial average are pointed a little bit higher. keeping an eye on the nasdaq in particular because we're watching intel which is weighing, in fact, on the dax. let's slip over to european trade and show you what's happening there. intel was down better than 4% after coming out with figures that didn't quite satisfy investors. the xetra dax down about .11%.
5:03am
the cac 40, the ibex doing a little better. first, though, let's look at the bond wall. after the uk came out with a really disappointing figure on uk retail sales for december, gilts there are selling off, rising over 20%. not necessarily a flight to safety. perhaps because the uk is seen as quite as safe. uk is seeing a bit of a rally. reflecting that loan data, up to 5.2% on the ten-year. the bund is now bidding up in price. yields falling to 1.6%. forex is where the action is today, but not just today, every day. the euro/dollar, down 0.5%. selling off a bit. the dollar/yen, coming back after breaching 90 overnight as there are continued talks. but there continues to be
5:04am
speculation about what the japanese central bank will do, the australian dollar not getting as much of a boost. down about .4%. that's an interesting development to watch. finally, the euro/swiss, it was over the 1.25 level and now it has given up some of its gains on that front. quick check off commodities, oil, despite the unrest we've been talking about in algeria, it's selling off, down 0.4%, 0.15%. interesting move today, especially given the fact that china is expected to account for some of that demand going forward. on that note, let's get over and talk china, check japan with li sixuan. she's in singapore to tell us the latest that happened overnight. >> thank you, kelly. definitely a good end to the week for asian stocks as major markets ended in the green. the shanghai composite gained 1.4% after more signs of china's recovery. index q4 gdp and december data.
5:05am
commodities and automakers were all broadly higher. some liquormakers were under pressure over concerns on anti-trust inspections. mainland shares were higher up 1% to close at a new 19 1/2 month high. the taiex added 1.5% today. tsmc shares jumped to its all-time high as they forecasted above q1 sales. in japan, investors set a large scale investing next week. the boj jumped nearly 3% to hit a fresh 32-week high. exporter stocks still benefited from the weaker yen which hit the 90 level today after shinzo abe's economic adviser says he doesn't see any problems even if the yen dropped to the $100 level. the kospi ended a three-day losing streak, finishing higher by 0.7%.
5:06am
the aussie market closed at a 20-month high. rio tinto shares jumped after appointing a new ceo. back to you. >> sixuan, thank you for that. look at all that green behind her. china's economy did pick up pace in the fourth quarter. gdp came in above forecasts. industrial output and retail sales beat estimates, although annual fixed asset investment did miss slightly. to put it in context, china's 2012 growth is now the weakest in 13 years, since 1999. home prices, though, continue to inch up in 70 cities across the country. up 0.4% month on month in december, this despite the government's measures to cool its property sector. new home prices fell in 54 of those cities. the mild uptrend is likely to continue supported by relatively loose monetary policy. joining us now for more is rob
5:07am
carnell. welcome. so china perhaps is trying to move investment from its property sector to the stock market. we're seeing the shanghai do better. are people right to think now that its performance is going to look better in 2013? >> that's a reasonable guess. one of the things we would look for is the change in the quarter on quarter growth in china. and it seems to be picking up. it's growth is seven consecutive down moves and this latest one shows it's turning around. so from a stock investor's point of view, that doesn't seem an entirely unreasonable thing. there's always the slight risk for china. growth starts to pick up. what is going to happen to inflation? it's okay at the moment. we have that property sector to worry about in the meantime. is there going to be any stimulus? doesn't look like it. it's not exactly a, hey, let's get stuck in the china aes stock market. it's more of a tempered back drop. >> yes, they're growing at the slowest pace in 13 years. in 2013, we were speaking with one guest earlier who expects
5:08am
8.5% growth at 2013. shouldn't we, instead, be continuing this slow moderation towards slower but more sustainable domestic demand triven levels? >> and this rebalancing story is a really important one. for china and for the chinese, the new administration, if you like, in china. how they want to see that happen. it's not about getting 2013 growth to be fantastic. it's to get the next 20 years of growth to be fantastic and sustainable and not create any bubbles in the way that we saw in response to the financial crisis. bubbles are created there. >> so here is the big question. is china growing too quickly? are policymakers potentially going to lean against this? >> i guess you have to start looking back at the property sector and looking at inflation all the time. if you start to see signs that these things are beginning to merge up particularly higher, then yeah, i guess that probably is the risk. our own house forecast is stronger growth than you mentioned.
5:09am
we've got 9% for 2013. >> 9%? >> which is pretty goy. >> that's extraordinary. 9%. >> we're growing at 2% quarter on quarter. it will get you there nicely. >> maybe that's why because, you know, if you look at the australia dollar today selling off, maybe there's a sense in markets that, in fact, with growth coming in as it is, that there has to be more of a reaction. what do you expect to happen on the fiscal monetary front? >> we're expecting kind of nothing, basically, that it's all been done and it's wait and see and let the economy do its own thing. but there is always the risk that i think thesetock higher. you are going to start leaning back against the property sector. in the end, you don't want a resurgence in property. that's not a productive way to get your economy going. you want productivity, all these things. >> especially right now to avoid that middle income trap that we hear so much about. do you think that china is
5:10am
navigating successfully? it's interesting, we can hear justin will i nds and others talk about it. they talk proudly about what the chinese have accomplished in what they call the western style of the washington plan. for them to continue that narrative, it's the next couple of years. >> well, yeah, but in that favor, they aren't wrestling the political and fiscal problems that the u.s. is favoring. there are always regulations, laws that you can impose to make sure stuff doesn't happen or does happen. it's a lot easier than when you're trying the win midterm elections. >> the first report on january consumer sentiment is out at 9:55 a.m. eastern. forecasts call for a reading of 75.5 up three points from
5:11am
december. we'll look at earnings from general electric, morgan stanley, schlumberger, johnson controls, state street and suntrust bank. the outgoing treasury secretary, whose last day on the job is january 25th, tells "the wall street journal" the u.s. is well ahead of other countries in balancing the financial system. geithner says the u.s. has more diversity of strength from energy to high tech and the public should find comfort and optimism in that. but, rob, the public is not finding much optimism, are they? >> they shouldn't, given that we didn't get the fiscal cliff deal that we thought we did on january 1st. we got a mini deal. it looks like rubbish. they shouldn't be desperately optimistic. other things are going right. stock prices have been reasonably buoyant. the gas prices are going to pick up again. consumer sentiment, i wouldn't be getting too carried away. >> do you agree with his characterization that this is
5:12am
the last quarter of recovery from the crisis? and it comes when mohamed el-erian is out there saying maybe we've reached the old normal and we're going back to the new normal. >> you can justify that comment. i think we've got a way to go. but it is beginning to feel a little bit more normal. it's just most very impressive growth. so we still have tight credit conditions. that's a hangover for the financial crisis. that isn't normal. >> is that why we saw this reaction? >> no. it's difficult, though. thee basically going to start raising rates no earlier than 2015. i think you have to believe them to some extent. some think that is justifiable. i personally don't. if you crank through the
5:13am
numbers, they're excusing optimal monetary policy. that seems to mean getting a very simple payroll and flattening an inertia term on the end of it. >> if the stock market does well enough, it will start to price that in. and the fed itself, there's no reason why it's going to stay on hold for the stake of staying on hold. it's just that they're more cautious on the outlook. >> they are very cautious. and i think they will try and find excuses not to hike rates, even if the unemployment rate gets up 6.5%. >> what may be thop those excuses? >> they're look at the labor force participation and things like that and say it's 657% and it isn't really 6.5 because people are dropping out of the labor pool. it could be earlier. i would be on the side of saying it could be earlier than 2015. i think that's perfectly sensible. and their history for forecasting unemployment rates
5:14am
is not a good one. >> are we below 7% year-end? >> we're getting close. >> we'll bring you back to what happens. chief international economist at ing. thanks very much. stick around. intel has beaten forecasters fourth quarter results, but shares are down. find out why some investors are running for the hills when we come back. ♪ [ male announcer ] how do you make 70,000 trades a second... ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission?
5:15am
♪ whatever your business challenge, dell has the technology and services to help you solve it. ♪ [ male announcer ] don't just reject convention. drown it out. introducing the all-new 2013 lexus ls f sport. an entirely new pursuit.
5:16am
5:17am
welcome back to the program. china he's easy growth fears with a slew of economic growth data year-end. intel shares take a hit. intel's fourth quarter profits fell 27th%, but managed to top forecasts as the chipmaker continues to feel pressure from weak pc demand. the company expects fourirst quarter revenue below analyst estimates. >> my expectation is that as we get into the back half of the year, we'll see some acceleration in the market. and that will be a combination of gdp improving, which i think
5:18am
is consistent with what economists are projecting. and then also our products cycles. >> intel fell more than 5% in after hours trade. it has some coverage, though. if you take a look at what is happening, frankfurt shares are down less than 4% in trade. it's interesting because we have seen tech, one of the least liked sectors going into earnings season perhaps helping to keep a floor under the shares reaction even on that disapoint. general electric reports fourth quarter results at 6:30 a.m. eastern. profits are forecast to rise more than 8%. ge has been pressured by lower selling prices and higher tax rates. while ge capital continues to recover, it does remain a down side risk. morgan stanley reports fourth quarter figures at 7:15 a.m. eastern. it's expected to earn 20 cents a share on revenue of $7 billion. morgan has named 144 -- that's a
5:19am
gross i think -- managing directors, the lowest number since the managing crisis. compensation will be in focus for morgan stanley as it tries new ways of compensating executives there and it follows goldman sax report earlier this week. general electric shares, morgan stanley both pointed to the up side in frankfurt shares today despite that index broadly being lower. now for sales, six story single-family home on 18 acres, 132 rooms, 35 bathrooms, great security, oval office. it's not green witwich, connect, it's 1600 pennsylvania avenue in washington. it's the white house. it would be value at about $295 million. that's up about 7% since the obamas moved in four years ago and the white house's value peaked at just under $ 00 million in july 2006. given that that was the top of the property boom, pretty impressive that we're not that
5:20am
far off. we want to know, how much do you think the white house is really worth? join the conversation here on "worldwide exchange." get in touch with us, entertain me while ross is away. worldwide@cnbc.com. tweet us, @cnbcwex or @kelly evans. next, u.s. planes will reportedly land in -- i'm sorry, u.s. planes have erroredly landed in algeria as hostage takers remain holed up in a gas complex. we will bring you the latest as we come back. let's take a look at how european equities are right now. advancers generally outpacing decliners. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground
5:21am
and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.
5:22am
5:23am
welcome back. auto quick check off markets. u.s. futures are pointing higher. at least the dow and the s&p. we're watching a 15 hunl level for the s&p which is about 25 points away from that. the nasdaq is lower, intel perhaps weighing on shares. they were down about 5% in after hours trade. as we saw now about less than 4% over on the frankfurt bores. european markets, as mentioned, are generally sneaking higher. the xetra dax is a little lower, the cac 40 and ibex moving to
5:24am
the up side in the last minutes, as well. a spokesman for the british foreign office says the uk government has received no word that the hostage crisis in algeria is over. multiple reports suggest dozens may have been killed after a failed rescue operation carried out by the al dpeeran military. >> the u.s. plane has landed to americans, but perhaps just as worrisome was a moratorium agency reporting that there were more operations to be carried out. joining us now, halema croft. good morning and thanks for joining us. thank you for having me on. >> thank you. we want to start with the latest news coming out of some of these groups in west africa. this news that there may be more kidnappings ahead, that they're warning algerians to stay away
5:25am
from foreign company installations. how much of a potential game changer is this for the industry? >> it's a huge game changer for the industry. when you look at algeria, most energy facilities are reported as pretty safe. they're in the desert. the algeria government has a lot of focus on keeping oil and gas exports flowing. this is a potential game changer. if algeria is not safe, then you have to look at the other countries. you think, if algeria is not safe, is libya safe? is nigeria safe? >> and those are some of the countries which have been figured for starting this unrest in the first place, the libyan conflict in particular. we know mali is where a lot of the fighting is happening. so from your point of view, arguing that, look, this is a one-off situation, we see oil prices down this morning. so what's the disconnect? >> i don't think this is a one
5:26am
off situation. i don't think the market is appreciating how serious the extremist threat is in north africa. the situation in mali, you could have it spread to multi.countries. i don't think it's necessarily going to be contained. i go back to the situation of algeria. this energy infrastructure was regarded as largely immune from this type of unrest. other countries are far more vulnerable and these groups operate there. >> it's fascinating. we said iea put out their 2013 view and it includes a sense that there's going to be a demand rebound particularly in china that supplies are, in fact, tight. how important is this part of the world for energy markets? >> huge. one of the reasons we could absorb the loss of iranian exports because of sanctions was a full return of libyan output to prewar levels. and you have to look at the situation in libya. we know eastern libya has been having extreme security problems. look what happens to the u.s. consulate. look what happens to the italian
5:27am
consulate this week. as these groups start targeting the energy sector, that could be real trouble for the energy markets. >> what do you recommend from here? whether it's investors, some of the countries operating in this part of the world. what do they do now if this is not something to be viewed as a one off event? >> this is such a troubling situation for international oil companies. they hate to lose their workers. they put such a premium on the safety of their workforce and these companies preemptively will shut down operations if they view their workers at risk. so this is a very dangerous development and i'm not sure the market appreciates that. >> and lastly, as we turn to look at the impact on world markets, do you expect we'll start to see oil prices moving higher because of more of these supply constraints at a time when most people have been saying the opposite was to happen had year? >> i would really look at the situation in libya. i would look at the situation in places like iraq. and you look at ron and i don't see any situation where we're going to get the iranian exports on the market.
5:28am
if anything, we're going to get more sanctions on iranian exports. i think you have to pay attention to the potential supply disruptions. >> okay. and we'll keep an eye on earth news out of the that area of the world this morning. helima croft, thanks so much for your time this morning. >> thank you. >> as she said, people perhaps not appreciating just how serious the situation is there and the longer term implications. stick around, norwegian cruise lines are set to sail on to the market today. will the company and other ipos find themselves in calm or choppy seas for 2013? we'll discuss when we come back. here is a quick look at futures. ♪ ♪ ♪ [ male announcer ] don't just reject convention.
5:29am
drown it out. introducing the all-new 2013 lexus ls f sport. an entirely new pursuit. we can afford to take an extra trip this year. first boston... then san francisco. hotwire checks the competitions' rates every day so they can guarantee their low prices. so our hotels were half price. ♪ h-o-t-w-i-r-e... ♪ hotwire.com
5:30am
5:31am
welcome back to "worldwide exchange." a u.s. plane lands in algeria to evacuate americans from a desert gas plant under siege as reports emerge that dozens may have been killed in a rescue operation. china's economy rebounds in the forty quarter, beating expectations and snapping seven straight periods of growth. intel shares under pressure as investors are unnerved by the chipmaker's big spending plans for 2013.
5:32am
another look at u.s. futures, we're seeing about 14, 15 points on the up side of the dow jones industrial average. the fass dak underperforming, perhaps weighed on by intel. down about 5% after hours to less than 4% in frankfurt trade. so finding their legs to some extent. tech, of course, being an unloved sector in ennings season. perhaps helping to keep a floor under shares. the s&p 500 roughly unchanged. it is nosing towards that 1500 level. jobless claims fell to a five-year low yesterday. we could see a pick up come in the weeks going forward. is a look at what's going on overnight, the ftse cnbc global the 300 is up. it was a broad situation in european markets. the ftse 1100 adding nearly 1% after disappointing we tail
5:33am
sales firgs fort uk. the xetra dax is underperforming just barely, lower on the morning. still the red chip today. the ibe ip 35 up almost .2% and the cac 40 up .25%. so how do you make money in these markets? here is what some of the experts have been telling us this morning. >> looking short on the yen, we think in dollar/yen, 94 is a reasonable target. i think all in all, the continues are right for the boj to execute their plan of further weakening the yen. >> when you look at a number of indicators, electricity consumption, wells fargo trading volumes, the pmis, for example,
5:34am
industrial production growth and we're seeing an improvement in the long growth. so that suggests supporters overall is the mining call. >> high yield investment grade don't profit. you have nothing to go for. look at bond managers where they are. >> well, the markets or ipos are getting back into gear. norwegian cruise lines price the at $19 a share. that was above its projected range. those shares will start trading on the nasdaq later today. still a game changer for the ipo market? we're joined by dan green.
5:35am
did. >> good morning. >> more weej kwan cruise lines, $19 a share. how significant is this or perhaps this week in general given the number of ipos that we're seeing, is this going to be a better year that we're seeing inspect. >> i think it probably is, given the broader markets don't collapse. norwegian lines in particular, they thought about 50% of the company at a valuation of about $2 billion. this ipo puts it at 3.8 billion. but for private equity firms, it's a valuation saying, you know what? there is a public -- that can give us a return. >> you know, that said, they did buy the company in 2008 so you hope there would be a bit of a rebound. what about the likes of the company in the years?
5:36am
>> i think that's one of the big questions here. if you look at i think the 25 largest buyouts, all of which you know is pre-lehman collapse, 1406 them are still in private equity hands. very few have gone public. a couple have been sold off. you have some really big companies here. and you think clear channel, you think first data. companies like that, some are struggling. i think this is the year that private equity is going to have to push some of those out. if only because they have limited funds systems and this is kind to have point. you're talking about 2006, 2007 deals. you have to get out of these or start getting out of these since ipos with slow bleeds. >> and what about the fundamentals in terms of who is buying into this market? within for the most part it's been companies buying back shares. who else is out there looking into its shares? where is the retail guy? is that a theme awl this year? >> i think it will, but, obviously, it depends on the company. you know, when you look at last year's ipo market, it was a decent year for ipos, at least in terms of performance.
5:37am
everything gets shaded a big by facebook. facebook overwhelmed everything. .i think even though facebook was juan-time thing, that has had an impact on the retail investor. nonetheless, so long as you have recognizable brands with decent growth, i think the retail guy will be there this year. we should have a number of companies that obviously aren't facebook in terms of brand recognition, but if people start looking at the brand fundamentals, even on the tech side, you'll have a bunch of good strong growth coming out. >> what is the mood in markets now that they've settled in and had a chance to look at that? >> i think in the sense of 2013 will be the first full calendar year that the jobs have been in place last year. what that means is you've got a so-called group of companies in the registration, companies that have given their banks in order, etcetera, but you, me, and the
5:38am
average person don't know that they're planning to go public soon. ask you have that big glut. they're starting to come out more with smarter source of ips. >> when is twitter going public? >> i don't think it's going to be this year. this has been the year that a lot of people thought. i think it's going to be early 2014. i know they're getting things in order. there is plenty of liquidity for early investors in twitter. next year, employees of twitter will start putting the pressure on. i would imagine a q1 of 2014 with the filing in q4 of this year. >> with pressure from the employees. i like it. dan, thank you very much. now boeing representatives have teamed up with officials in
5:39am
japan to ground the dreamliner. the cause of the battery heating on board was still unknown. and now phil lebeau making it maybe five or five joins us on the phone from chicago. phil, good morning. thank you again for calling this. look, we know that u.s. safety officials will be on the ground in japan. what is at stake here? what is the purpose for this visit? >> this is for them to get their own hands on look at what happens, a, with the battery and, b, with the ana plane. they finished their inspection of the ana plane. now they'll be focused on looking at the battery. what they're doing here is look at what commonality there is between the battery that failed in japan and the battery that caught on fire from the japan airlines 78.in boston last week.
5:40am
once they can look at that and is if they can establish some commonality, if there is some commonality in terms of what went wrong with this battery, that gives them a leg up in terms of saying, okay, here is what we think happened, here is what we think needs to change in the future with regards to the battery, the power systems on these planes. and at this point, i can tell you from talking to people in boeing, they are working on a solution that they believe perhaps as early as next week will allow them to get the dreamliners back in the air. we are still away from that happening. they still have to work this out wfaa. that's the direction they're moving in right now in terms of coming up with a solution, saying here is how we can guarantee that these batteries will not fail in flight and are ready to function as they should. >> so it's interesting. we just saw shares up about 1 .2% yesterday in u.s. trade. this despite the fact what we might call the headline risk. do they make the average person a little more concerned?
5:41am
>> i think investor in boeing are generally taking the approach of as long as we do not see them have to make a major change in the manufacturing of the dream liner, most are looking at this and saying, sometime in the relatively near future, they will get this grounding behind them and the dreamliner will get back in the air and the production, the delivery of dreamliners will continue. if that doesn't change, if they continue on the face of moving by the end of this year, and there's all indications that they are not going to have to change that schedule, investors are looking at this and saying, we'll get past this and this company will deliver as expected the remainder of this year. >> any update on the engineer strike? >> boeing made a four-year offer to the engineer's union and the engineers previously a few days ago said they made their last best offer. we're this that phase now, kelly, where they're bag back and forth and my suspicion is
5:42am
that we are going to see them work out a deal relatively soon here. you can usually start with these things when they're so far apart that there's no hope of a resolution. i think we're probably going to see a contract here. >> we'll leave it there. phil lebeau calling in from chicago this morning bright and early. thanks very much. now china's economy is on the rebound. where will the growth go from here? we'll bring you the story from beijing is when we come back. ♪ [ male announcer ] how do you turn an entrepreneur's dream... ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it.
5:43am
5:44am
5:45am
welcome back to the program. u.s. planes reportedly land in algeria in a bid to rescue americans as the hostage crisis continues. china shows a growth of economic data. and shares are down in intel. after seven straight quarters of slowing growth, gtp came in above forecasts at 7.9% from a year earlier. investor output and retail sales beat analysts. to put it in context, china's 2012 growth is the weakest in 13 years since 1999. still, when exactly can we call
5:46am
it a recovery? a senior china correspondent eunice eun has more in this report. >> the latest chinese data tell us that there is a rebound. but the question is, is there a full blown recovery? officials said that they do expect a recovery for the rest of the year. they say there's going to be stable growth at an appropriate level at somewhere between 7% to 8%. the set of numbers make a nice back drop for the leadership which is equity .ed to come in in march. the new leadership will want to maintain a stable economy. there are other risk factors at play. the u.s. fiscal situation as well as the european sovereign crisis could potentially trim exports. there's a lot of concern now about inflation. so far, it looks as though inflation numbers are under control, both for housing as well as for other prices. but policy measures are supposed to be monitoring the prices because it could potentially t thy to support further growth here. eunice eun, cnbc, beijing.
5:47am
and you can see the smog behind her, too. now let's take a look at today's other top stories. at&t will take a $110 billion charge in the fourth rt kwaer on higher than expected pension costs. at&t says its wireless product will be hurt by higher smartphone sales because the company pay aes bigger subsidy for each phone, higher sales tend to pressure margins. at&t shares are down by 1.25%. down almost 10% over the last three months. and the long awaited oprah winfrey lance armstrong interview did air last night. the former tour de france winner admitted that he took performance enhancing drugs while competing in tournaments. he also confessed to bullying those around him that disapproved. >> yes or no, did you ever take banned substances to enhance your cycling performance? >> yes. >> yes or no, was one of those banned substances epo? >> yes. >> did you ever blood dose or
5:48am
use blood transfusions to enhance your cycling performance? >> yes. >> did you ever use any other banned substances, like testosterone, cortisone or human growth hormone? >> yes. >> yes or no, in all seven of your tour de france victories, did you ever take banned substances or blood dope? >> yes. >> in your opinion, was it humanly possible to win the tour de france without doping? seven times in a row. >> not in my opinion. >> that's a real shame, too, for all those other people involved at the time. now, president obama is getting high marks as he heads into his second term. and the latest nbc/"wall street journal" poll, 50% approve of his job performance. only 43% say they feel good about the next four years. and just over a third are
5:49am
confident in the president's ability too stroengten the economy. republicans don't come off particularly well. more people would say they would make the gop if the u.s. debt ceiling isn't raised. ask it's for sale, a six-story single family home, 132 rooms, 35 bathrooms, great security, busy building and large oval office the the. if the white house were listed on the market, it would be worth about $295 million. that's up about 7%. the u.s. home values peaked in 2006. earlier, we asked viewers how much they thought whether the white house was worth and whether they would be interested in buying it. john tweeted in to say, it's priceless. too much history has been made there and plenty more to be made. $300 million isn't that much compared to a $11 trillion coin.
5:50am
that's for sure. there are ways of coming up with that cash if they needed to. keep the comments coming. coming up, will intel cast a poll on today's trading inspect we'll head to the bond pits in chicago for answers. stay with us.
5:51am
5:52am
let's bring you the latest on the algerian hostage crisis. the latest suggests a u.s. plane has arrived to evacuate american staff. dozens are feared killed during a rescue operation carried out by the algerian military. meanwhile, according to a ni, the kidnappers who have affiliations with al qaeda have pledged to carry out more attacks on facilities operated by foreign companies.
5:53am
that's troubling news for the entire energy complex this morning and for all the families involved. let's get a look at the agenda today in the u.s. the first report for consumer sentiment due out with a gain of three points from december up to nearly 75.5 expected. on the earnings front, we'll get numbers from general electric, morgan stanley, sulk better shay, johnson controls and suntrust banks as the financial earnings season continues. u.s. futures are pointed higher. the dow by almost 20 points. the nasdaq is undertransforming. intel's fourth quarter profits fell 27%. they beat forecasts, but the chipmaker does continue to feel pressure from weak pc demand. fourth quarter revenues of about $12.7 billion below analyst estimates. it projects a sharp increase in want kaal spending this year, upwards of 13 billion. that was well above what analysts have expected. shares are down more than 5% after hours. recovering in frankfurt trade, down by less than 4%.
5:54am
jimm joining us now for more is tom howitz. todd, tech did not love going into thernings season. we knew it might be the weakest link here. do you think that will help to lend the floor to shares as we move to tech earnings season? >> good morning, kelly. you know, i think that's probably right. i think, you know, we're probably at somewhere near some type of floor here. intel's earnings just say not great, but, however, the stock was rallying into those earnings a little bit. the sell-off is pretty much, you know, a balance. but i think that, you know, probably it's near some sort of a floor here in tech. that's pretty heavy selling. you look at apple and it's own bare market down 37% from the top. i think there will be some sort of a floor here coming into this earnings season. >> i'm looking at 1477 on the s&p 500. todd, are we going to hit 1500? >> you know, right now, the market is very strong.
5:55am
you know, we're -- first of all, we're in a dull market cycle here where we're lacking volatility. volatility is down at six-year lows. we have only buyers right now. what i mean by that is that in dull markets, markets tend to drift higher. so the market is drifting through new highs. we took out the five-year high yesterday. we've broken out. it looks like we're on a run to that next level and that next level looks to be somewhere 1490, 1500 and maybe higher. we have definitely broken out of the old resistance from five years ago. so now the next step is that could become support and it looks like the market wants to work higher. an old saying is you don't want to fight the take, you don't want to fight the trend. >> you don't want to dance while the music is playing to borrow a phrase. todd, at what point do you start to fade the move here? >> well, you know, you have to wait until the market indicates that it wants to switch direction. you know, you can't -- there is no way that you can possibly say, well, this is going to be
5:56am
the top. now, i know people try to do it. but it's hard to pick tops or bottoms in any market movement. the market is going to go up until it decides that the music stops and it's not going to go up any more. but for right now, it's going up and the next real level to look at would be, you know, mid 1490s, 1500. and until it gets there, you know, there is no reason to try to fight this overall market love. it wants to go higher and it's going higher in spite of apple down. it's gone down in spite of the techs being very heavy. it's gone up in spite of a lot of bad news. it still managed to go up. so, you know, the market is better than i am. the market is never wrong. it's an absolute number. it keeps going higher. no reason to try to fight the overall trend. >> todd, just to focus on a couple of the earnings due out today, any control hurdles there? we know that bofa and sydney weren't exactly a great indication for confidence either in the banks or in fundamentals more broadly.
5:57am
>> first of all, the earnings are underestimated now. i think the earnings will be okay. i don't think they'll be a problem. one of the things you have to look at is the market has had a big move coming into this earnings season. so a lot of the numbers are already built in. so even though if you look at bank of america and citi yesterday, oh, they missed. they didn't miss as badly because the stocks had huge rallies coming into those earnings numbers. and the same thing for today. i look at good solid earnings based on what market expect ages are. i don't know if we can continue the rally. >> we'll leave it there. todd, thanks very much. in chicago it's one of the latest starts ever for the year without an inch of snow. here in london, the snow is falling. we can show you some pictures of that as we go to break. thank you so much for tuning into today's program. next week, it's all about jobs. we'll have ross westgate on the ground there. you won't want to miss any of it. time for u.s. "squawk box." have a great weekend.
5:58am
ash card from capital one, sven gets great rewards for his small business! how does this thing work? oh, i like it! [ garth ] sven's small business earns 2% cash back on every purchase, every day! woo-hoo!!! so that's ten security gators, right? put them on my spark card! why settle for less? testing hot tar... great businesses deserve great rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? here's your invoice.
5:59am

Terms of Use (10 Mar 2001)